Partnership

In my contribution "Partnership: can, should, will be" (November 10) responding to The Sunday Times (ST) editorial of the previous week, I described in concrete detail what the partnership option for Malta's relations with the EU consists of.

I contrasted its effects with those of full EU membership to show why partnership will be more beneficial in the future to Maltese families. There was a response that same day in the ST editorial and last week by Dr Austin Bencini.

At least this time round, no attempt was made to accuse people, who prefer partnership to membership, with pique. At present, while a massive media and propaganda campaign drums the virtues of membership into people's minds, one must be thankful for small blessings.

I note with satisfaction that the comparisons I made regarding the different effects on the future of our families resulting from partnership and from membership have not been contested by the ST's editor or by Dr Bencini.

The comparisons dealt with access to the EU's industrial markets; effects on Maltese agriculture and on local food prices; the impact on the self-employed categories, and on the labour market; the purchase of property by EU citizens; the rights of Maltese fishermen over a 25-mile zone; the environmental impact of certain EU commercial norms; and financial arrangements applying to Malta. I understand that there is agreement on the conclusions arising from those comparisons.

An integral part of Europe

What the ST's editor and Dr Bencini did in their response was to shift the grounds of the discussion. I have no problem with this, even if Dr Bencini claimed to want a "Socratic dialogue" and then proceeded to distort the terms of the "dialogue" to suit his pre-set conclusions.

To be fair, even Plato indulged in this practice when he reported on how the real Socrates conducted his dialogues, so I should not complain.

First let me comment about the use by Dr Bencini of the term "Europe from the outside" to qualify partnership.

Malta is an integral part of Europe and will never be outside it.

The question facing Maltese families is not whether we should be "in" or "out" of Europe or the EU, but what is the best relationship for Malta with the EU given our circumstances. Partnership is best for our families, and this in no way reflects on the conclusion reached by other countries, given their own circumstances.

Obviously, partnership has to be negotiated with the EU, as constituted at the time when one is negotiating.

Dr Bencini asks: Would the newly admitted EU member states... be prepared to offer Malta something more enticing than what they would have acquired in their negotiations? Is it real politik to expect this?

It is gratifying to find Dr Bencini agreeing that partnership is more enticing than membership. We are making progress.

However, it is usual for the pro-membership lobby and their supporters in Brussels to argue that partnership is in fact the pits. Indeed, on the Monday following Dr Bencini's article, The Times quoted EU negotiator Arhi Palosuo as saying that partnership is nothing more than a "one-sided" solution favouring the EU.

The truth of course is that the partnership option is different from membership. It has a different profile of obligations and benefits, more suited to enhance the future of Maltese families, given our circumstances as a very small island nation. And yes, I expect the EU to negotiate the matter in a rational and fair way.

As a committed European, I do not share Dr Bencini's apparent belief that the EU is out to crush those countries which would prefer a partnership with it, instead of membership.

It is true that there are elements within the EU which have increasingly seemed to want the Union to behave like a hegemonic power. However, Labour has been repeatedly assured that the EU has no aspirations to hegemony.

Dr Bencini asks: How much would this (enlarged EU) be prepared to burden further their taxpayers to give Malta a better deal "from the outside" than partnership within the EU would have entailed?

Again I note how Dr Bencini once more stresses that partnership is the better option. Where I fail to follow him, this time, is in his misconception that partnership would burden EU taxpayers in any way.

It will do nothing of the sort. They will not have to pay anything. But if Dr Bencini has concrete information to the contrary, in the spirit of genuine Socratic dialogue, I invite him to tell us about it.

Neither more nor less

Similar points apply to his somewhat repetitive questions, which repeatedly contradict Mr Palosuo: ...would the EU therefore be prepared to give more to outside partners than to members? (Is it real politik... to expect) that the EU be prepared to treat outside competitors to their market by allowing them to get away from their rules and at the same time, simply by calling themselves partners, give them more than the members inside?

But pray, what is "more" in this context? We are talking about different deals: full membership with its spread of obligations and benefits; contrasted to partnership with a different spread of obligations and benefits.

Partnership is more appropriate than full EU membership for Malta not because it "gives" more or less than membership, but because it fits Malta's circumstances better. The rules that apply will be appropriate to such a relationship, placing no side at any disadvantage, in the application of free trade and co-operation principles that are well known in international trade.

In spring 1998, the EU accepted to negotiate a partnership arrangement with Malta. Since then, we have had, on successive occasions, the assurance that though EU decision makers would prefer Malta to become a full EU member (naturally, since that would be in their interest), they would negotiate a partnership deal with a Maltese government democratically elected to carry it out.

Turning now to points made in the ST editorial of November 10, I note that the rationales I described two weeks ago for the central European states, and for Cyprus to want to join the EU, have not been contested.

Instead, I am asked to discuss the rationales that made Greece, Spain and Portugal, and more recently Austria, Sweden and Finland, join the EU.

Let me quote from a talk on EEC enlargement that I gave at an Institute of Bankers seminar in March 1981, regarding Greece, Spain and Portugal: "Firstly, in the wake of long periods spent under military, fascist rule (these countries) believe that institutional branching into EEC systems gives their new political structures a better chance for survival.

"Secondly, since... a sizable part of the economy is reliant on agriculture, (they) expect a boost to farm sectors resulting from the higher prices and wider markets that farmers will have access to...

"Their third reason... is access to EEC industrial markets... even if accompanied by strong competition on home markets... The fourth reason ... is the need to guarantee that these countries' immigrant workers continue with full rights to work in EEC countries, and to benefit from social security and other advantages."

Regarding Finland, Austria and Sweden, which have small, advanced economies, membership was motivated by the maturation of their industrial free trade and co-operation agreements (in fact partnerships) concluded with the EEC in the mid-Seventies, plus the easing of central and northern European tension following the collapse of the Iron Curtain.

The balance favours partnership

On economic matters, to justify EU membership for Malta, the ST editorial rather unbravely, refers us to the speech about EU-related issues, that was given recently by the Central Bank governor during a grossly unprofessional sortie into partisan issues.

It so happens that the economic logic behind the Central Bank governor's speech is naïve and badly flawed.

¤ It underestimates the compliance costs on Maltese industry resulting from the full application of the EU policy acquis, including the implementation of the common agricultural policy, the common external tariff and other taxes, leading to an erosion of competitivity for Maltese industrial exporters.

¤ It fudges the big cost to Malta that must be funded from internal taxation, of having to implement EU policies that are irrelevant to us when not clearly detrimental to our flexibility, not least by setting up new institutional and personnel structures which we simply do not need.

¤ It ignores the negative impact on competitive prospects for new industrial and other investment, resulting from an equalisation of local costs to EU levels, in the context of the transport costs that Maltese output must sustain.

¤ It hugely overvalues the worth to Malta of access to the EU's network of agreements with other countries. In reality, over the medium term, the countries and regions that are of direct interest to us include the US (plus Canada and Australia), Russia and North Africa.

1) With the US and Russia, EU membership would constrain, not improve, our flexibility and competitive status: firstly, because we would introduce levies on their agricultural exports to us; secondly, because our trade concerns with them will be subsumed totally in the wider EU context.

2) In North Africa, the EU regime vis-à-vis Libya is much less favourable than the one Malta now already enjoys. EU membership would obligate Libya to peg Malta down to the treatment she gives to other EU members.

3) It is true that vis-à-vis Tunisia, free industrial trade could apply very rapidly, helping a few of our exporters to that country. On the other hand, this would be a two-way process happening under a system negotiated by the EU in terms of its overall interests, in which the Maltese interest naturally never featured.

Thus, the Maltese market for farm goods and processed food, and for light industrial goods would overnight become open to very low cost Tunisian production. Malta would be much better off with a bilateral investment and trade deal with Tunisia.

Indeed, the claim made by the ST editorial (using its own terminology which I contest), that on the basis of what the Central Bank governor said, "the costs of staying out... are simply too high" is simply not proven in any way. Indeed, the governor's fudges and overestimates signal that the opposite is the case.

Turn now to the sectoral comparisons on the impact of partnership and membership of the EU, that I made two weeks ago, and which were not contested by the ST editorial or by Dr Bencini. The balance swings firmly in favour of the partnership option.

To those who wish to arrive at a realistic view on what is best for the future, the conclusion is inescapable. We need wide-ranging policies that can trigger initiative and new opportunities.

Up to now there has only been a tunnel vision obsessively focused on EU membership at all costs, plus stagnation and pie in the sky assessments and promises that never led to concrete results.

We need realistic solutions that are well fitted to Maltese conditions. I repeat: partnership with the EU is a winning option that can, should, will be achieved because it is in the interest of all our families.

Dr Sant is leader of the Opposition Malta Labour Party.